European Emission Trading Scheme: What are REALLY Polish interests?

April 1, 2013

On 14 March 2013 European Parliament with the majority of 377 to 195 adopted a resolution on the Energy Roadmap 2050 published by the Commission in 2012. It included among others important statements concerning the reform of the Emission Trading Scheme that would instigate a complete overhaul of the European power sector. The possible changes to the ETS proposed by the Parliament included withholding some allowances from the market (“backloading”), increasing the annual reduction of the amount of certificates on the market (current decrease: 1.74% per year) and possibly setting a “reserve price” for the allowances.

To what degree these changes would be effective in increasing the price of carbon needs to be further discussed. But one thing is clear: a reform of the European Emission Trading Scheme is urgently needed. Without making producers of electricity from conventional sources pay the full external price of the pollution they cause, alternative sources of energy have only small chance to develop: that is unless there is an additional and effective support mechanism for renewables. But with all the retroactive changes in some countries and legal instability which recently (luckily only shortly) affected even Germany, an effective support mechanism for renewable sources of energy is more an exception rather than the rule. At the same time investors who would like to replace old coal-fired power plants by newer and more effective ones or by gas-fired plants are unwilling to invest because they don’t know how the legal framework behind the ETS will change in the coming decades. So changes to the ETS are necessary and supported by the majority of countries and non-governmental organizations, including EURELECTRIC.

One of the major opponents of the reform is Poland. It has been the mantra of the Polish government (mainly the Ministry of Environment) that increasing the price of carbon is against Polish interests. A day after the vote in the European Parliament MEP from the Civic Platform Jacek Saryusz-Wolski accused three other MEPs from Poland of betraying Polish interests by voting for the resolution. This statement is especially interesting for me: when writing my Ph.D dissertation I spent a lot of time analyzing the interests behind the European renewable energy and climate policy and the interests of those actors at the domestic level responsible for the implementation of this policy. I argued that the discrepancy between the European and Polish interests was the main reason for lacking or ineffective implementation of the renewable energy and climate policy in Poland.

What is in the interests of a country is not easy to define. Often the argument that something is or isn’t in the national interests is used by those, who are lacking any other more rational arguments. That was clearly the case as far as Mr. Saryusz-Wolski or Polish Minister of Environment are concerned. Indeed the opposite of what they argue is true: The higher the price of carbon, the better for Poland and that for at least three reasons. First of all, Polish power sector has been granted significant concessions and until 2020 will be granted a large share of the emissions for free. That should have a positive (short term) impact on the competitiveness of the Polish energy intensive industry. Secondly, all the money spent on the emission certificates by the Polish energy companies will stay in Poland. That’s a blessing for the Polish budget. Although at least half of the money should be spent on the reduction of emissions by among others increasing energy efficiency of the energy power plants, in the future less coal will have to be mined and less coal miners will die (105 coal miners died in 10 accidents underground in Poland since 1990) underground to generate the same amount of electricity. Finally, Poland will get a significant share of the 12% (10+2) of the money coming from the auctioning of the CO2 allowances in other countries. The higher the price of carbon, the more money will flow to Poland. Even Mr. Korolec, Polish Minister of Environment, should be able to understand that. So what’s the point in opposing measures that would increase the price of carbon?

In the previous entries I have written extensively about the close connections between the Polish government and the four energy companies PGE, TAURON, ENEA and ENRGA. With higher CO2 prices these companies, generating on average almost 90% of electricity from the coal, would have to pay more money to purchase the carbon allowances. Mr Korolec himself, at that time as undersecretary in the Ministry of economy, personally congratulated representatives of the companies which during the negotiations over the Energy and Climate Package in 2008 managed to get significant concessions for Polish power sector, most of other getting free allowances for coal-mines which still don’t exist. For Mr. Korolec, as well as for the whole government and the interests of the major energy groups are synonymous with the Polish national interests. But these are not the interests of the Polish society or the rest of the Europeans.

Back in 2010 I had a chance to publish a critical article about Polish energy policy on the blog of Grzegorz Wisniewski, one of the major supporters of the development of renewable energy in Poland. When introducing my entry he expressed his worry, that my entry could be damaging for my future career, indicating wittingly that his position as a “traitor who was even supporting the EU energy and climate package” is already well known in Poland. Despite my largely critical articles about the Polish energy and climate policy I don’t consider myself a traitor of the Polish interests. I think that a more ambitious and effective climate policy is not only in the Polish interests but also in the interests of the future generations in Poland and elsewhere. The reason for that is not only the need to mitigate the threat of global warming but also the chance resulting from the development of a brand new industry, chance that the Polish government captured by the interests of the large energy companies still didn’t realize.

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Andrzej Ancygier Ph.D, born 1981, specializes in the European energy policy with focus on renewable energy and climate policies. In his PhD dissertation he analyzed the implementation of directives 2001/77/EC and 2009/28/EC in Poland. His research was done mainly when working for the Executive Agency for Competitiveness and Innovation of the European Commission. After returning to Berlin he started teaching a course “European Environmental Policy” at the New York University in Berlin. Currently, as a Research Fellow at the Hertie School of Governance, he analyzes the impact of the German energy transformation on Polish renewable energy and climate policy.